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Northern Vertex raising up to US$25M for Moss project, US gold strategy

Northern Vertex Mining Corp. said May 26 that it is raising up to US$25 million to fund its Moss gold-silver property in Arizona through to production and launch a U.S. gold consolidation strategy.

The company signed a subscription agreement for a US$20 million nonbrokered private placement with Greenstone Resources LP, comprising 51,769,230 units at 52 Canadian cents apiece, and launched a separate nonbrokered private placement of up to approximately 12,942,300 units at the same price to raise gross proceeds of up to US$5 million.

Each unit will include 1 common Northern Vertex share and 0.5 of a nontransferable share purchase warrant, with each whole warrant exercisable for five years at 91 Canadian cents per share for the first two years and at C$1.04 per share for the remainder of the five-year term.

The Greenstone financing is scheduled to close in two tranches, with the first tranche of about US$10.8 million expected to close shortly.

Upon closing the first tranche, Greenstone will own approximately 27,920,000 common Northern Vertex shares for a 19.99% shareholding, which is the maximum interest Greenstone may hold under the terms of the financing. As such, the warrants from the first tranche will not be exercisable until Northern Vertex shareholders approve the transaction.

Likewise, the second tranche of the financing will require shareholder approval as it will result in the creation of a new control person of the company. Shareholder approval is expected to be sought during a special meeting slated for the second half of July, with closing of the second tranche expected shortly after approval is secured.

Greenstone will have an approximately 29.3% shareholding in Northern Vertex, on an undiluted basis, after the financing is completed, which will increase to 38.4% upon the exercise of all warrants under the Greenstone financing and the issuance of shares under the separate US$5 million placement.

In accordance with the companies' deal, Greenstone will have the right to nominate two directors to the Northern Vertex board and will have a standard pre-emptive right for as long as it maintains at least a 10% stake in Northern Vertex.

Proceeds from the financings, which remain subject to various other conditions, are also earmarked for general working capital.

Earlier in May, Northern Vertex secured a US$9 million equipment finance facility for the Moss property.